European Journal of Comparative Economics 

About: European Journal of Comparative Economics is an academic journal. The journal publishes majorly in the area(s): European union & Unemployment. It has an ISSN identifier of 1824-2979. Over the lifetime, 207 publications have been published receiving 3285 citations. The journal is also known as: The European Journal of Comparative Economics & aThe European journal of comparative economics.

Oil Price Shocks and Stock Markets in BRICs

Abstract: This paper examines the impact of oil prices on real stock returns for Brazil, China, India and Russia over 1999:1-2009:9 using VAR models The results suggest that whereas real stock returns positively respond to some of the oil price indicators with statistical significance for China, India and Russia, those of Brazil do not show any significant responses In addition, statistically significant asymmetric effects of oil price increases and decreases are observed in India The analysis of variance decomposition shows that the contribution of oil price shocks to volatility in real stock returns is relatively large and statistically significant for China and Russia JEL classification: G12; O57; Q43 Keywords: Oil price shocks; Real stock returns; BRICs (ProQuest: denotes formulae omitted) 1 Introduction The year 1998 witnessed a serious decrease of crude oil prices, and futures prices of New York Mercantile Exchange light sweet crude oil fell to about USD10 per barrel Oil prices, however, began to increase from the beginning of 1999 and their rise accelerated after 2003, hitting a record high of USD145 per barrel in July 2008 Because of the global financial turmoil in late 2008, oil prices plummeted to USD34 per barrel in February 2009, which have recently started to rise again This situation has reinvigorated the debate on the effect of oil prices on the economy Many studies have examined the influence of oil prices on the macroeconomy, stimulated especially by dramatic crude oil price increases because of unstable economic and political situations in the Middle East Rasche and Tatom (1981) examined the impact of sharp increases in the price of energy on output in the US, Canada, France, Germany, Japan, and the UK Bruno and Sachs (1982) reported on relations between input price shocks and economic deceleration in the UK Darby (1982) conducted tests of significance in real income equations of oil-price variables for the US, the UK, Canada, France, Germany, Italy, Japan, and the Netherlands Hamilton (1983) analyzed the influence of the oil price increase on the US output Burbidge and Harrison (1984) discussed the impact of oil price increases on the price level and industrial output in the US, Japan, Germany, the UK and Canada Gisser and Goodwin (1986) reported on relations between oil price increases and macroeconomic indicators of the US While crude oil prices were over USD 30 per barrel at the beginning of the 1980s, they plunged to about USD 15 in 1986 Mork (1989) reported on the relationship between oil prices and GNP in the US data, taking into account the large oil price decrease in 1986 He indicated that although Hamilton (1983) demonstrated a strong correlation between oil price increases and gross national product growth in US data, the question of whether the correlation persists in periods of price decline remained unanswered The empirical results of Mork (1989) suggest that the impact of the oil price increase and decreases on the US output was asymmetric Recent studies regarding the analysis of the influence of oil price shocks on the macroeconomy include Brown and Yucel (2002), Jimenez-Rodriguez and Sanchez (2005), Cunado and Perez de Garcia (2005), Cologni and Manera (2008), and Kilian (2008) Brown and Yucel (2002) presented a survey of the theory and evidence on the relationship between economic activity and oil prices Jimenez- Rodriguez and Sanchez (2005) revealed that the effects of an increase in oil prices on real GDP growth were different from those of an oil price decrease, using data of G-7 countries, Norway and the Euro area as a whole Cunado and Perez de Garcia (2005) indicated that oil prices have a significant effect on economic activity and price indices in six Asian countries, and found evidence of asymmetries in the oil prices-macroeconomy relationship for some countries Cologni and Manera (2008) analyzed G-7 countries and suggested that for all countries except Japan and the U …

Specialisation and Convergence of European Regions

Abstract: The purpose of this paper was to analyze specialization and convergence of European countries and regions, within the framework of integration in the EU. This is important not only for long-term real convergence processes, but also for a proper functioning of the monetary union (in the line of research on the OCA's criteria, asymmetry of shocks and synchronization of business cycles). The position of new member states is particularly delicate, also considering the forthcoming adoption of the euro by some of them. As indicated by the EU Treaty, economic growth should be balanced with economic and social cohesion that includes a careful consideration of regional disparities. Our empirical investigation focuses on the regions of EU25, further broken up into other relevant groupings (EU15, EMU, and the new members' EU10 group), over the period from 1980 (or 1990 for EU10) to 2005. This paper considers a rather fine regional disaggregation (NUTS-2 level), counting 250 regions. The analysis of different indices of specialisation point to a prevalent increase of homogeneity of sector structures across European regions, although in some cases (especially in the industrial sector and in some services) specialisation has increased. For convergence, a sigma convergence's analysis confirms a reduction of disparities, both at a country and regional level. However, a trade-off between fast national growth and internal distribution has emerged in the early stages of development, as in the case of new members. Moreover, beta convergence has also been established - regarding per capita income, employment and productivity - for almost all territorial aggregates (excluding the new members since 1999). The addition of structural variables, following a beta-conditional approach, indicates a positive role for services and a negative impact of agriculture. Finally, some preliminary results have been obtained by the innovative inclusion of specialisation indices within convergence regressions. JEL Classification: R11, P52, O52 Keywords: regional economies, European regions, growth and convergence, specialisation 1. Introduction Europe has recently experienced wide ranging and in depth integration. Considering the deepening aspect, the European Economic and Monetary Union (EMU) in 1999 and the circulation of the new common currency - the euro - since 1.1.2002 are the most momentous achievements, although some dark clouds have appeared since the arrest of the ratification process of the new Constitutional Treaty. Concerning the widening process, the 2004 enlargement was the most conspicuous in the EU's history. The ten new members are now adequately integrated in the single market and some of them are almost ready to adopt the euro as well. The final goal of the EU2 - to be achieved through the common market and the economic and monetary union - also includes economic and social cohesion, both between members (as the mention of solidarity would indicate) and within themselves. This is testified by the weight given to regional policy3 and structural funds; and so regional convergence is an additional objective of EU. The links between the two concepts - economic and monetary union (EMU) and economic and social cohesion (in particular regional convergence) are two-ways. On one hand, the EMU may be an instrument to achieve economic and social cohesion (but what is the evidence of the integration process so far?). On the other hand, economic convergence is also a prerequisite to accomplish an effective EMU. Here, we do not refer to nominal convergence requirements (a la Maastricht), but rather to real convergence of European countries (and regions) as a condition to realize an advantageous EMU, as shown in the literature on optimum currency areas (OCA). We do not mean that real convergence - in per capita incomes, productivity, production and employment structures - is a prerequisite for the euro's adoption4, but rather that real convergence helps the effective working of EMU and raises net benefits of the union. …

China and India: Openness, Trade and Effects on Economic Growth

Abstract: 3 The purpose of this paper is to analyse the economic growth of China and India in terms of their integration in the global economy. We begin with a discussion of some stylized facts concerning their recent economic growth, the most significant institutional reforms, with particular reference to trade relations, and their impact on their economic development. We then propose a descriptive analysis of economic growth, opening up of the economies and trade specialisation, by comparing the features and trends of the two countries (by considering trade and foreign direct investment data). We have also estimated some econometric relations between economic growth and trade/openness, with the addition of control variables (such as the gross fixed capital formation). We initially used a panel data model for the two countries, to be estimated with fixed effects; to test for reverse causality, we re-estimated the fixed effects model by 2SLS (with the inclusion of specific instrumental variables). The effect on economic growth (in terms of GDP per capita) of our variables of interest - Openness and FDI - remains positive and statistically significant in all specifications, which confirms our findings even if we treat these variables as endogenous variables. The results prove the positive growth effects, for the two countries, of opening up and integrating in the world economy. Note that the robust growth of these two "giants" has contained the initial impact of the recent global crisis and is now sustaining the recovery of the entire world economy. Other policy relevant implications are discussed in the concluding section. JEL: P52, P33, F14, O53 Keywords: China and India, economic growth, trade opening, trade specialisation, trade and growth 1. Introduction In demographic terms, China and India are the two most important countries in the world and they are also rapidly becoming the leading powers in economic terms. Although the two countries have many common features, their recent economic takeoff differs in timing, intensity and key characteristics of the development processes. In a long-run perspective both countries have benefited from opening up to international trade and foreign relations, although they initiated liberalization policies only when their domestic economies were sufficiently strong to face foreign competition. Their integration in the global economy means that they are certainly affected by world economic developments, such as the last economic crisis.4 On the other hand, the growth of China and India has a great influence on the world economy, not only in good times (as is well documented, for instance, by Srinivasan 2006) but also in bad times. In fact, the two Asian countries are helping to pull the world out of recession through their imports, despite persisting imbalances in specific trade relations (e.g. between China and the US). The short-run forecasts are also quite promising.5 A first aim of this paper is to quantify and characterize the impact of trade on the economic growth of China and India by focusing on trade dynamics, degree of openness, FDI flows and specialisation patterns. A second aim is to econometrically estimate the links between openness and growth, for the two countries, in the last three decades. The structure of the paper is the following. In Section 2 we shall present some stylized facts - together with a partial review of the main literature - concerning the most significant institutional reforms, with particular reference to trade relations and their impact on economic growth. Section 3 presents a descriptive analysis of economic growth, opening of the economies and trade specialisation. In Section 4 an attempt is made to estimate econometric relations between economic growth and trade/openness (and other control variables). The conclusions highlight key results and policy implications. 2. Reforms, opening and recent economic growth in China and India China and India share some key common elements: geographically, they share the same continent and are separated by a common border; demographically, they are "giants", with populations exceeding one billion; historically, the two countries have a rich and long history, making them world leaders until the 19th Century. …

Reforms and Economic Growth in Transition Economies: Complementarity, Sequencing and Speed

Abstract: This paper considers the effects of sequencing and reform speed on output performance in transition countries. These largely unsettled issues are addressed using principal component techniques to construct reform clusters and by explicit tests of speed effects. The results indicate that broad-based reforms are good for output growth, but so is a policy of liberalisation and small-scale privatisation without structural reforms. Conversely, large-scale privatisation without adjoining reforms, market opening without supporting reforms and bank liberalisation without enterprise restructuring affect growth negatively. Swift reform policies allow transition countries to benefit from higher growth for longer time. The speed of reforms appears otherwise to have little effect on growth in the short and medium term.

The Impact of Structural Funds Policy on European Regions' Growth. A Theoretical and Empirical Approach

Abstract: 1. Introduction The main purpose of European Cohesion policy is to decrease regional disparities within the European Union. In accordance with the treaty, the Union works to "promote harmonious Development" and aims particularly to "narrow the gap between the development levels of the various Regions". This principle implies that Objective 1 is the main priority. These regions have a GDP per capita below 75% of the Community average and share some identical economic indicators: low level of investment, a higher than average unemployment rate, lack of services for businesses and individuals and poor basic infrastructure, among others. Thus far, Structural policies seem to have been designed on the basis of three main assumptions: (i) gaps exist between EU regions, (ii) structural policies are able to reduce those gaps, and (iii) regional growth and convergence leads to cohesion. It is therefore crucial to evaluate the impact of Structural Funds in order to help the European Commission in the pursuit and planning of future policy to maximize its impact on economic development. In this paper, I propose a theoretical model of economic growth as a framework to evaluate empirically the impact of the Structural Funds programmes on the Objective 1 European regions growth process. To check the Cohesion Policy effects, I test the equation derived from the model that relates the rate of growth of income per capita with the initial level of income per capita, the Structural Funds, the catching-up variable and the initial level of TFP. The sample is composed of forty-one Objective 1 European regions (NUTS 2) during the two first programming periods of Structural Funds, which ran from 1989 to 2000. The estimation is made by OLS using a panel data approach, where the use of fixed effects emerges endogenously from the structural specification of the model. The results of the estimation show a positive effect of Structural Funds (SF, henceforth) on the Objective 1 regions' rates of income growth over the period considered. However, the results are slightly different when we divide the sample into the two programming periods. In that case, we observe that during the first programming period, SF have had a clearer positive effect in the regions' growth. The biggest difference between periods emerges when trying to measure the presence of the catching-up effect and the speed of convergence between regions. Both phenomena are very significant in the first period but almost null in the second. The rest of the paper is organized as follows. Section 2 briefly presents the European Structural Funds Policy and the theoretical approaches to evaluate the impact of SF. Section 3 develops a "hybrid" growth model that partially endogenizes the rate of technical progress. Section 4 introduces some descriptive information and describes the data. Section 5 offers the main empirical results and finally, Section 6 is devoted to conclusions. 2. Institutional setting and academic views The European Union's SF are intended to help increase economic and social cohesion between Member States. The Funds' contributions have grown from 8 billion euros per year in 1989 to 32 billion euros per year in 1999 and more than 2/3 of the budget of the SF is allocated to helping areas which are lagging behind in their development. The SF do not constitute a single source of finance within the European Union budget. They have their own specific thematic area. The European Regional Development Fund (ERDF) finances infrastructures, job-creation investments, local development projects and aids for small firms. The European Social Fund (ESF) aims to prevent and combat unemployment as well as to develop human resources and promote integration in the labour market. The European Agricultural Guidance and Guarantee Fund (EAGGF) supports rural development and improvement of agricultural structures. However, all of them work together to help economic activities in the regions take off by providing them with the basic infrastructure they lack, and by adapting and raising the level of human resources and encouraging investments in businesses. …